Airlines in Chile warn that the sustained rise in oil will have effects on fares

Santiago de Chile.- The Chilean Association of Airlines (Achila) stated this Friday that a sustained increase in oil prices due to the war in the Middle East will affect the fares of its services. “We are realistic about the international context and if this upward trend in the price of oil continues, it will inevitably put pressure on the operating costs of airlines,” the organization said in a statement, which includes Latam -the largest in Latin America-, Sky, Jetsmart and other companies operating in the southern country. The cost of fuel represents “25 to 35 percent of operating expenses, so a sustained increase could affect fares“, explained Achila. The price of aviation fuel rose 58.4% since the beginning of the conflict on February 28, following the attack by Israel and the United States against Iran and the regional escalation in the Middle East, according to the ‘jet fuel’ price monitor of the International Air Transport Association (IATA). The possible effects of the increase will not only affect passenger transport, but also cargo transport, which plays a fundamental role in the country’s foreign trade, the association added. The Brent crude oil barrel for delivery in May rose this Friday by 2.67% and closed above $103 a barrel, while Texas oil (WTI) rose this Friday by 3.1%, approaching $100 a barrel again.

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Investors are keeping a close eye on the Strait of Hormuz, through which 20% of the global maritime crude oil flow usually transits, which remains de facto closed by Iran and where traffic has been almost completely interrupted since the beginning of the war, which is now two weeks old. Investors barely reacted to the announcement that the 32 founding countries of the International Energy Agency (IEA) will release 400 million barrels from their strategic reserves, as doubts persist as to whether it will be enough to compensate for the losses, equivalent to 10 million barrels per day, according to the agency. For its part, the United States has also confirmed this Friday that it will temporarily lift sanctions for the purchase of Russian crude oil, in addition to releasing 172 million barrels from its energy reserve, with the aim of containing the rise in prices.